A Primer On Political Economy In Static General Equilibrium

Terry Roe

No 280361, Miscellaneous Publications from University of Minnesota, Department of Applied Economics

Abstract: This paper highlights, illustrates and pulls together in a single model notions of political economy that are common to the static -general equilibrium literature. Political authority acts as though it forms preferences over the welfare of private agents from which policy functions are obtained that give the rule for the level to set a pre­determined policy instrument. However, the preference weights of the authority can be influenced by the lobbying behavior of private agents. A Nash game can determine the level of the preference weights, which in turn leads to a solution to instrument levels and, instantaneously, a market equilibrium for the economy. A distorted economy can thus exist indefinitely. How "outside" policy actions might alter the political equilibrium conclude the paper.

Keywords: Public Economics; Research Methods/ Statistical Methods (search for similar items in EconPapers)
Pages: 24
Date: 2006-01
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:umaemp:280361

DOI: 10.22004/ag.econ.280361

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